Former MF Global CEO testifies before Congress
Jon Corzine will have to explain how the bank lost $1 billion of customer money.
Stacey Vanek Smith: Today Jon Corzine goes back to Capitol Hill. This time, instead of asking the questions, he'll be answering -- for the collapse of brokerage firm MF Global. Corzine was the CEO of the company and is accused of taking huge risks on European bonds. Now the company is missing hundreds of millions of dollars.
Heidi Moore reports.
Heidi Moore: For most of his career, Jon Corzine took the kinds of risks that paid off big. He made his name trading government bonds at Goldman Sachs, became the firm's CEO and then wrestled the secretive bank into going public.
Roy Smith was a partner at Goldman and saw Corzine in action.
Roy Smith: Well, he took large risks when he was at Goldman Sachs, without any question.
Corzine left Wall Street to be a U.S. senator and a one-term governor of New Jersey. Then last year he joined MF Global, a small commodities brokerage. As CEO, he pushed it to take big risks on European bonds with its own money. Goldman might have been able to absorb the losses, but MF wasn't. Corzine's lucky streak ended.
Smith: I was concerned that he was walking into a firm that had no experience really of dealing with the kind of risk-taking that he wanted them to take.
And it was likely Corzine was a little rusty.
Smith: He'd been out of the game for 10 years. And this is a very difficult game to leave for such a long time. Very hard to just go away for 10 years and come back and assume everything is the same.
The biggest issue in MF Global's collapse is over $1 billion of lost customer money. It shouldn't have been betting with that.
Gerald Celente was an MF Global client who is hunting for his lost cash. He thinks Corzine got a pass because of his reputation.
Gerald Celente: If any broker did what Jon Corzine allegedly did, boy, those SWAT teams would be there and they would be breaking down the doors and arresting him. But not Jon Corzine.
Corzine's fall from grace is like a Shakespearean tragedy, says Paul Argenti, a professor at Dartmouth's Tuck School of Business.
Paul Argenti: You know, just hearing what he was like at Goldman Sachs versus what we see now -- it's kind of scary.
Corzine's former colleagues in the U.S. Congress know they'll face backlash if they go easy on him today.
In New York, I'm Heidi Moore for Marketplace.